Development-stage cancer drug developer Genta said it will liquidate its assets through a filing in U.S. Bankruptcy Court for the District of Delaware, following the collapse of its stock on Thursday.
Shares of Genta on the OTC markets closed at 0.0003 yesterday and slipped further this morning in early trading to 0.0002 after the company disclosed its liquidation plans. The share closed Wednesday at 0.0012 before losing three quarters of its value.
“Upon the filing, a Chapter 7 trustee will assume control of the company and the assets of the company will be liquidated,” the company disclosed in a Thursday filing with the U.S. Securities and Exchange Commission. “The officers will be terminated, and the directors will resign effective immediately upon the filing.”
Genta’s planned filing did not appear this morning in the bankruptcy court’s database.
On July 27, Genta restated its most recently filed quarterly results, covering the three months ending March 31. Genta recorded a net loss of $10.7 million, compared with the originally reported net income of $5.2 million. The company listed total liabilities of $50.6 million—of which 64% were current and the remaining were long-term liabilities, principally warrant liabilities—and total assets of about $4.6 million. The company also listed a total stockholders’ deficit of $46.1 million.
“After consultation with the company's independent registered public accounting firm, the company's principal financial and accounting officer and its audit committee concluded that the company's unaudited financial statements filed for the three-month period ended March 31, 2012 contained a material misstatement pertaining to the company's calculation of a warrant liability and a resulting noncash charge to its statement of operations,” Genta said last week.
“The company has actively sought additional financing and a strategic partner; however, to date, those efforts have been unsuccessful,” Genta continued, adding that absent such help, it would file for bankruptcy.
Genta last considered bankruptcy in 2009, after its then lead drug Genasense for melanoma failed to show a statistically significant benefit in its co-primary endpoint of progression-free survival or for its secondary endpoints of overall response in a Phase III trial. That trial came a year after the company laid off half its staff, and five years after FDA rejected the drug based on trial data.
The company’s current lead product Ganite (gallium nitrate injection) is intended to treat hypercalcemia, the most common, serious metabolic disorder in patients with cancer. Of the company’s pipeline drugs, tesetaxel is under development for three indications: advanced gastric cancer, advanced prostate cancer, and advanced breast cancer. Tesetaxel has already been studied in a number of Phase I and Phase II studies, encompassing more than 450 patients, Genta stated on its website.
In June, Genta and FDA came to terms under the agency’s Special Protocol Assessment (SPA) process for a planned Phase III trial by the company of its oral tesetaxel as initial chemotherapy for women with metastatic breast cancer. Genta also completed reviews and received positive Scientific Advice status on the same trial design from the European Medicines Agency. On July 30, Genta said it received approval from China’s SFDA to start clinical trials with tesetaxel in that country.
Genta’s other pipeline drug, oral gallium, is being studied for conditions associated with bone loss.